Tech Mahindra Limited, a leading provider of IT, networks and engineering solutions and BPO services, and Mahindra & Mahindra (M&M), part of the global $16.9 billion Mahindra Group, have jointly entered into an agreement with Pincar S.r.l., to purchase a controlling stake in Pininfarina S.p.A., an iconic Italian brand in automotive and industrial design.
Pininfarina’s legendary brand status will allow Tech Mahindra access to relationships the iconic designer has nurtured with the best in the world over its 85-year history, including with Ferrari, Alfa Romeo, Maserati and Peugeot. This will mean an opportunity for Tech Mahindra to influence product conceptualization and design and styling through Europe’s best-in-class design house.
Terms
As part of the agreement, Tech Mahindra and M&M plan to purchase 76.06 percent of Pininfarina shares from the current controlling shareholder Pincar S.r.l. at a price of Euro 1.10 ($1.21) per share. This investment by Tech Mahindra and M&M will be done via a joint venture company. Tech Mahindra will own 60 percent and M&M, 40 percent.
This will be followed by an open offer for all the remaining ordinary shares of Pininfarina, at the same purchase price paid for the shares held by Pincar. A rights issue to infuse funds into the design firm also will be executed before the end of 2016.
Pininfarina will continue to remain an independent company, listed on the Milan Stock Exchange, with Paolo Pininfarina continuing as the chairman of its board.
The acquisition will give Tech Mahindra a critical foothold in key, early-stage conversations in the automotive and other verticals. Tech Mahindra also will benefit from the designer’s focused presence in Italy and Germany, which are considered hotbeds of European automotive manufacturing, as well as in the U.S. and China.
For Pininfarina, the acquisition will mean an ability to leverage Tech Mahindra’s presence across 60 countries and access to about 780 customers. Tech Mahindra’s global delivery model will lend Pininfarina a newly heightened scale to its operations.
Reinforcing Tech Mahindra’s vision of a world of connected solutions, the acquisition will enable a strong entry into automotive styling, exclusive vehicle design and development and reinforced body engineering capabilities. It also augments Tech Mahindra’s transportation, aerospace and industrial design offerings. The synergy will help the duo cross-sell and up-sell their services to existing clients and help attract new ones.
More from the P-I-E
Pininfarina’s philosophy of “Purity, Innovation and Elegance” will find a perfect fit with Tech Mahindra’s world of connectedness, where design and styling, hand in hand with engineering services, will go after a larger market.
Tech Mahindra’s well-entrenched Integrated Engineering Solutions (IES) business will complement Pininfarina’s range of offerings. It is now equipped to pursue bigger opportunities in the outsourced automotive engineering services industry that totals around $10 billion with a CAGR of 8 percent. The IES offering will be able to compete better with traditional western players, with styling, design and prototyping.
Brand with a History
Pininfarina is a styling company best known for its stunning designs of famous car brands, including Ferrari, GM, Peugeot and the Alfa Romeo. Started 85-years ago by founder Battista “Pinin” Farina, the company is the Italian symbol for jaw-dropping car designs. It has designed almost 1,000 cars across brands over the years.
The company’s enduring relationship with Ferrari began when “Pinin” Farina and Enzo Ferrari met in 1951. Farina designed the first Ferrari, the 212, followed by the tremendously popular 250 GT. Farina’s breath-taking designs took Hollywood by storm, too, inspiring the film “Sabrina,” starring Audrey Hepburn, William Holden and Humphrey Bogart, along with the Spider that Farina designed.
Anand Mahindra, chairman of the Mahindra Group, commenting on Pininfarina joining the Mahindra family, said, “Pininfarina will add enormous value to Tech Mahindra’s portfolio of engineering services. But just as important is the fact that the legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra Group. Given the increasing design sensibilities of today’s consumers, product design will greatly influence customer choice and experience, and hence our success.”
“Our clients want more from us, consistently. Adding Pininfarina’s legendary design skills to our Integrated Engineering Solutions enables a strong entry into automotive styling, design and development and reinforces our body engineering capabilities. Further, Pininfarina’s 25-year design expertise in industries beyond automotive will give us that winning edge in areas such as aerospace, consumer electronics, architecture and interiors and transportation, where we already have a strong footprint,” said CP Gurnani, CEO and managing director, Tech Mahindra.
Paolo Pininfarina, chairman, Pininfarina S.p.A., added, “In a globalized world, entrepreneurship and capital do not need a passport. We are joining hands with a $3.9 billion technology and global partner, and part of the $16.9 billion global Mahindra Group, which will not only strengthen our Italian identity but will open more doors. Tech Mahindra’s global presence and global delivery model will allow us to compete for a larger pie of the business.”
